In a press release, the United States Securities and Exchange Commission announced settled charges against Zachary Coburn, the founder of EtherDelta, for illegally operating an unregistered exchange within the US.
According to the press release, EtherDelta is an online platform for secondary market trading of ERC20 tokens, a type of blockchain-based token commonly issued in ICO's.
This is the SEC's first enforcement action based on findings that Zachary Coburn was running the platform as an unregistered national securities exchange.
SEC Charges EtherDelta Founder With Operating an Unregistered Exchange https://t.co/KYRBmn2UHw— SEC_News (@SEC_News) November 8, 2018
'Over an 18-month period, EtherDelta's users executed more than 3.6 million orders for ERC20 tokens, including tokens that are securities under the federal securities laws', the reports states.
Stephanie Avakian, Co-Director of the SEC's Enforcement Division said that 'EtherDelta had both the user interface and underlying functionality of an online national securities exchange and was required to register with the SEC or qualify for an exemption'.
'We are witnessing a time of significant innovation in the securities markets with the use and application of distributed ledger technology', said Steven Peikin, Co-Director of the SEC's Enforcement Division. 'But to protect investors, this innovation necessitates the SEC's thoughtful oversight of digital markets and enforcement of existing laws.'
The report concludes by stating that Coburn consented to the order and has agreed to the penalties.
'Without admitting or denying the findings, Coburn consented to the order and agreed to pay $300,000 in disgorgement plus $13,000 in prejudgment interest and a $75,000 penalty. The Commission's order recognizes Coburn's cooperation, which the Commission considered in determining not to impose a greater penalty.'
what strikes me most about the @SEC_News action against @EtherDelta is:— Meltem Demirors (@Melt_Dem) November 8, 2018
- small disgorgement of $300k
- only $75k penalty for operating unregistered exchange w >3M trades
- co-operation listed as reason for not penalizing further
overall, seems very ... positive? pic.twitter.com/ypmdOGSO6N